{"id":22097,"date":"2025-05-21T13:03:17","date_gmt":"2025-05-21T11:03:17","guid":{"rendered":"https:\/\/altax.al\/?p=22097"},"modified":"2025-05-26T13:21:53","modified_gmt":"2025-05-26T11:21:53","slug":"poverty-and-inequality-in-albania-and-the-time-for-a-new-fiscal-justice","status":"publish","type":"post","link":"https:\/\/altax.al\/en\/poverty-and-inequality-in-albania-and-the-time-for-a-new-fiscal-justice\/","title":{"rendered":"Poverty and inequality in Albania and the time for a new Fiscal Justice"},"content":{"rendered":"\n

\ud83d\udd34 In a country where about half of the population lives at risk of deep poverty<\/strong>, any policy that ignores this reality is not merely unjust it is economically irrational and politically unsustainable<\/strong>.
Albania cannot claim development without equality<\/strong>, cannot seek integration without reform, and cannot build trust without a fiscal system that distributes fairly.<\/p>\n\n\n\n

\ud83d\udd3b Albania remains a significant example of a fiscal system that, instead of reducing inequalities, often reinforces them<\/strong>. According to the report \u201cTax Burden in Albania and the Western Balkans 2024\u201d<\/em>, our country has one of the most regressive tax structures<\/a>[1]<\/strong><\/a> in the region<\/strong>, with only a modest impact on reducing inequality and poverty<\/strong>.<\/p>\n\n\n\n

\ud83d\udcc8 The economy grows, but inequality deepens<\/strong>
Latest data from Eurostat raise alarm bells<\/strong>: Albania ranks first in Europe<\/strong> for the percentage of the population at risk of poverty and deep social exclusion. In 2023<\/strong>, about 42% of the Albanian population \u2014 over 1 million citizens \u2014 live in severe poverty<\/strong>, unable to meet at least 7 out of 13 indicators of economic and social deprivation, such as rent or loan payments, annual vacations, basic nutrition, heating, or replacing worn-out furniture.<\/p>\n\n\n\n

Compared to regional countries, the situation is significantly worse: Montenegro (34.1%)<\/strong>, North Macedonia (32.6%)<\/strong>, Serbia (30%)<\/strong> \u2014 figures that show Albania is not merely an outlier, but a critical case requiring a radical reformulation of economic and fiscal policies<\/strong>.<\/p>\n\n\n\n

\ud83d\udcca Figures that speak for themselves<\/strong>
While the EU achieves a 36% reduction in the Gini coefficient through taxation and social transfers<\/strong>, Albania achieves only a 20% impact<\/strong> \u2014 less than Kosovo (13%)<\/strong>, and far behind countries like Slovenia or the Czech Republic<\/strong>, which have combined progressive policies with targeted support<\/strong>.<\/p>\n\n\n\n

There exists a structural inequality<\/strong> that is hindering the country’s development<\/strong>, not only socially but also economically. An economy where such a large portion of the population is excluded from basic opportunities<\/strong> cannot grow sustainably. GDP growth becomes meaningless if it is not accompanied by increased inclusion and economic justice<\/strong>.<\/p>\n\n\n\n

While the European Union achieves a 36% reduction in the Gini coefficient<\/strong> through fiscal policies and social transfers, Albania reduces it only by 20%, and Kosovo by just 13%<\/strong>. This means that unlike the EU \u2014 which manages to significantly mitigate inequalities through its tax and social benefit systems \u2014 Albania fails to do the same<\/strong>, mainly due to flat taxes, selective exemptions, and shallow social support<\/strong>.<\/p>\n\n\n\n

\ud83d\udeab Informal employment is another deep wound.<\/strong>
With nearly 30% of the workforce outside formal schemes<\/strong>, many citizens remain unprotected and outside the social safety net. This translates to lack of insurance, limited rights, and long-term poverty<\/strong> \u2014 especially for youth and women<\/strong>.<\/p>\n\n\n\n

\ud83d\udcc9 The consequences?<\/strong>
A system with a weak redistributive effect and a regressive burden<\/strong>.<\/p>\n\n\n\n

To genuinely influence poverty and inequality reduction<\/strong>, Albania must shift to a progressive, inclusive system focused on social justice<\/strong>.<\/p>\n\n\n\n

\u26a0\ufe0f Today’s reality consists of evasion, tax exemptions, and informality<\/strong>
The scale of tax evasion is alarming<\/strong>. With about 33\u201338% of taxable potential lost<\/strong>, Albania ranks among the countries with the highest levels of evasion in the Balkans<\/strong>, on par with Kosovo but with lower capacities to address the issue<\/strong>. Sectors such as construction, trade, and services<\/strong>, where the informal economy often thrives, do not contribute proportionally to their real profits<\/strong>.<\/p>\n\n\n\n

Meanwhile, tax exemptions<\/strong>, which in theory aim to encourage development, have in practice turned into favoritism channels<\/strong> for selected sectors such as energy, tourism, and technology<\/strong>. Instead of helping equality, they deepen it<\/strong>, since the main beneficiaries are large and formalized businesses<\/strong>.<\/p>\n\n\n\n

\ud83d\udccc The data is clear!<\/strong><\/p>\n\n\n\n

\u23f0 Time for a new fiscal justice<\/strong>
The report emphasizes that it’s not enough to increase public revenues<\/strong> \u2014 they must also be fair and progressive<\/strong>.
The time for a new fiscal justice is more than an ethical call \u2013 it is a strategic necessity<\/strong>, for three major reasons:<\/p>\n\n\n\n

    \n
  1. Long-term economic sustainability<\/strong> requires a system that does not base growth on social exclusion or informality<\/strong>, but on human capital and active inclusion<\/strong>;<\/li>\n\n\n\n
  2. The credibility of public institutions<\/strong> is directly linked to the sharing of burdens and benefits<\/strong> \u2014 where justice is lacking, the citizens\u2019 distrust becomes inevitable<\/strong>;<\/li>\n\n\n\n
  3. The process of European Union integration<\/strong>, declared a national priority<\/strong> by the current government after the Socialist Party’s latest electoral victory, is no longer merely a political matter, but a demanding economic and institutional exam<\/strong>.<\/li>\n<\/ol>\n\n\n\n

    \ud83c\udfaf With the political goal of EU membership by 2027<\/strong>, Albania must accelerate the implementation of essential reforms<\/strong> in several directions:<\/p>\n\n\n\n

    \u2022 Public finance reform<\/strong>, to increase efficiency and transparency in revenue collection, and to ensure fair and honest use of public funds;
    \u2022 Improvement of the social protection system<\/strong>, with more targeted, inclusive, and better-coordinated schemes with the labor market;
    \u2022 Creation of a progressive tax system<\/strong>, aligned with EU standards and promoting equality through proportional contributions on income and wealth;
    \u2022 Development of the formal labor market<\/strong>, through discouraging informality and strengthening mechanisms for social insurance, vocational education, and support for productive entrepreneurship;
    \u2022 Empowerment of independent fiscal and statistical institutions<\/strong>, to ensure objective monitoring of inequality and assess the real impact of public policies.<\/p>\n\n\n\n

    \u2705 Fiscal reform as the true test of integration<\/strong>
    If Albania is to join the EU as a country that not only follows the formal rules of the acquis communautaire<\/em>, but also respects the core European values<\/strong> \u2014 solidarity, equality, and social justice<\/strong> \u2014 then fiscal justice is the first test to pass<\/strong>.<\/p>\n\n\n\n

    Not just to fulfill negotiation chapters, but to build a functional economy<\/strong>, a more equal society<\/strong>, and a fairer state<\/strong>.<\/p>\n\n\n\n

    \ud83d\udce3 This is the moment to clearly separate the growth model of the past<\/strong> \u2014 concentrated, unequal, and shaped by narrow interests<\/strong> \u2014 from the development model of the future<\/strong>, based on inclusion, justice, and transparency<\/strong>.<\/p>\n\n\n\n

    Because fiscal justice is not a negotiation chapter \u2014 it is the condition to truly become part of Europe<\/strong>.<\/p>\n\n\n\n

    \ud83c\udde6\ud83c\uddf1 Albania cannot move toward European integration with a system that serves the few and excludes the many<\/strong>.
    Fiscal justice is not a luxury \u2014 it is a condition for a functional economy and a healthy democracy.<\/strong>
    And it starts now.<\/strong><\/p>\n\n\n\n

    \n\n\n\n

    [1]<\/a> Albania has one of the most regressive tax structures in the region, because:
    \u2022 It taxes relatively low incomes more than high incomes;
    \u2022 It does not sufficiently use redistributive tools such as social transfers;
    \u2022 It allows for exemptions, evasion, and informality that protect the rich and burden the poor.<\/p>\n","protected":false},"excerpt":{"rendered":"

    \ud83d\udd34 In a country where about half of the population lives at risk of deep poverty, any policy that ignores this reality is not merely unjust it is economically irrational […]<\/p>\n","protected":false},"author":2,"featured_media":22092,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[1],"tags":[9068,8843,17004,17006,17010,17005,17009,8842,17013],"class_list":["post-22097","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-economic-inequality","tag-informal-economy","tag-long-term-poverty","tag-non-redistributive-system","tag-regressive-taxes","tag-selective-exemptions","tag-social-justice","tag-tax-evasion","tag-unfair-fiscal-policies-2"],"featured_image_src":{"landsacpe":["https:\/\/altax.al\/wp-content\/uploads\/2025\/05\/social-inequality-0f35c3-640x445.jpg",640,445,true],"list":["https:\/\/altax.al\/wp-content\/uploads\/2025\/05\/social-inequality-0f35c3-463x348.jpg",463,348,true],"medium":["https:\/\/altax.al\/wp-content\/uploads\/2025\/05\/social-inequality-0f35c3-300x300.jpg",300,300,true],"full":["https:\/\/altax.al\/wp-content\/uploads\/2025\/05\/social-inequality-0f35c3.jpg",640,640,false]},"yoast_head":"\nPoverty and inequality in Albania and the time for a new Fiscal Justice - 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